US clearinghouse Apex to go public via $4.7bn deal with Ledecky's SPAC

US clearinghouse Apex Clearing Corp said on Monday it will go public through a merger with a blank-check firm backed by New York Islanders co-owner Jon Ledecky, in a deal that values the combined entity at $4.7 billion.

The deal with Northern Star Investment Corp II is expected to fetch Apex $850 million in gross cash proceeds, including a private investment of $450 million anchored by Fidelity Management & Research Company LLC and Baron Capital Group.

The deal comes in the backdrop of a boom in business for clearinghouses, driven by a recent social media-fueled trading frenzy for heavily-shorted stocks such as GameStop and others.

Apex was the clearinghouse for trading app Robinhood until it launched its own trade-clearing system in 2018. Clearinghouses validate transactions between buyers and sellers of securities and provide settlement services.

Northern Star, led by Ledecky and former Cosmopolitan magazine editor-in-chief Joanna Coles, last month raised $400 million in an initial public offering.

Another Ledecky- and Coles-backed SPAC, Northern Star Acquisition Corp, agreed to take pet services firm Barkbox Inc public for $1.6 billion in December.

Apex is owned by fintech firm Peak6 Investments LLC and its customers include Firstrade Securities Inc and Social Finance Inc (SoFi), the company's website showed.

SoFi is also going public through a merger with Social Capital Hedosophia Holdings Corp V, a blank-check firm backed by venture capital investor Chamath Palihapitiya.

SPACs are shell companies that raise funds through an IPO to take a private company public. They have gained immense popularity as they provide more certainty over achievable valuation and require less scrutiny than traditional IPOs.

Apex will be listed on the New York Stock Exchange after the merger and will trade under ticker symbol "APX".

Citigroup was the financial adviser to Northern Star, and J.P. Morgan Securities to Apex.